Digital First, Last But Not Only

Michael Hedges February 22, 2016 Follow on Twitter

Every publisher considers, studies, business models. Confounding some, there is no grand unifying vision for a sustainable, successful business. The rise and rise of digital media has produced many models. There will be many more.

Publisher of the UK daily Independent and Independent on Sunday (IoS) Evgeny Lebedev soured the day recently for many newspaper people. The well-regarded titles will, from March, become online-only. An apocalyptic tone arose from many: The end is neigh. Can it be that the litany of predictions offered since the internet captured attention, imagination and, of course, money finally prove true?

Barely six years ago, in March 2010, Independent News & Media (INM) sold the Independent to Alexander Lebedev, a wealthy Russian, for a nominal GBP 1 with INM contributing GBP 9 million to operating costs. A few months earlier he had acquired a majority stake in the Evening Standard from Daily Mail & General Trust (DMGT) for the same amount. With his son, Evgeny, in command of the ESI Media publishing group the Daily Standard became a London-oriented free-sheet, the Independent redesigned several times with the compact i newspaper launched all in short order. Marketing campaigns for all titles were robust. The London Live digital TV channel was launched in 2014. Coinciding with the digital-only announcement for the Independent and IoS the i newspaper was sold to regional UK publisher Johnston Press.

“I genuinely believe that the future is digital and that the industry in denial,” said the younger Mr. Lebedev to the Guardian (February 12). “The question should not be why we are doing it, but why others in the industry are not.”

There are differing views. “I’ve always had a fundamental belief that video didn’t kill the radio star,” said Johnston Press CEO Ashley Highfield, quoted by The Drum (February 17). “New technology comes along, but it rarely wipes out what came before it. I think people will still want print for many years to come.”

UK newspaper publishers, in unison with many counterparts around the world, once assumed a certain noblesse oblige regarding the popular shift to digital media. That evaporated as print circulations and ad revenues plummeted. “The trends are against us,” said Rupert Murdoch to a publishing industry meeting in 2005.

“Scarcely a day goes by without some claim that new technologies are fast writing newspaper’s obituary,” noted News Corporation’s principal owner and Times of London proprietor. “Many of us have been remarkably, unaccountably complacent. Certainly, I didn’t do as much as I should have after all the excitement of the late 1990’s. I suspect many of you in this room did the same thing, quietly hoping that this thing called the digital revolution would just limp along. Well, it hasn’t.”

It was, in a sense, the starting volley in a war between the printed press and the internet, newspapers and the digital world. Many publishers were relieved to have Mr. Murdoch lead that charge. Acquiring Dow Jones and the Wall Street Journal in 2007, News Corporation learned about paywalls. By 2010 the Times, too, had a hard paywall and Mr. Murdoch’s attention turned to search engine indexing as a revenue source. Google and others politely demurred, telling newspaper publishers that indexing is optional, can easily be stopped and money will not be forthcoming.

Five or six years is an eternity in the media world. Digital ad spending eclipsed all other platforms in the UK combined, reported eMarketer in early 2015, reaching GBP8.1 billion (€10.5 billion). Nearly a third - GBP3.3 billion (€4.25 billion) - was ad spending on mobile platforms. Some of it, certainly not all, accrued to publishers that also print pages.

An “inflection point” was reached, said DMGT finance director Stephen Daintith, quoted by the Guardian (March 25, 2013), as the publisher’s print revenues were passed by digital revenue growth. The Mail Online site, adjunct to tabloid Daily Mail, is often cited as the world’s biggest online news portal. For the final quarter 2015 the company reported online ad revenues increasing 27% over the same period in 2014 with US online revenues surging 66%. Print ad revenues decreased 15%, circulation revenues off 4% and the company raised the Daily Mail cover price by 8%.

News websites command the attention of UK online and mobile users. Digital market researchers SimilarWeb, tallying data from several sources, reported Daily Mail site dailymail.co.uk reaching nearly 3.67 billion UK page views in 2015, the Guardian’s guardian.com reaching 2.1 billion, then Daily Telegraph’s telegraph.co.uk with 1.9 billion. The Independent’s independent.co.uk ranked 12th with 735 million desktop and mobile page views. News aggregator msn.com, owned by Microsoft and with an international footprint, ranked 2nd with 5.6 billion UK page views. All of that pales by comparison with the public broadcaster BBC bbc.co.uk website’s 18.6 billion pages views in the UK.

UK publishers, not limited to the scowling Mr. Murdoch, have long railed about the power of the BBC’s online (and off-line) draw. Free access, license fee notwithstanding, just isn’t fair, they say. Indeed, people in the UK seem unwilling to pay anything for news, reported a Reuters Institute study of news users across several countries conducted through 2015. Just 6% in the UK said they are willing to pay for news online, compared with 7% of online users in Finland and 45% in Turkey. Finland also has a well-regarded public broadcaster - YLE - and Turkey’s media scene is under constant government threat.

While fighting a “culture of free” sustained anger, lawsuits and lobbying from some publishers for a few years, it has not reaped, generally, that digital dividend. Comparing the Reuters Institute data with press freedom indexes, Sweden’s Journalist Association director Jonas Nordling sees an interesting correlation, noted in medievarlden.se (February 17). “If sharply limited press freedom is marked by willingness to pay for digital news then we are simply in trouble.”

The UK National Union of Journalists (NUJ) did not take the Independent’s digital-shift kindly, continued downward spiral of media worker’s employment feared. Mr. Lebedev, said the NUJ statement, has been “less forthcoming about the future of the rest of the staff.” Telegraph Media Group employees bristled when told consultancy Deloitte would be conducting a “strategic review,” often short-hand for restructuring or inevitable sale. Rumored job cuts and restructuring at Johnston Press put its staff on tender hooks, exacerbated by the i newspaper acquisition.

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